Data processing, 1959. Image by James Vaughan, CC license

If you search “technologies for supply chain evolution” you will get 17.8 million results, many of which will mention IoT, robots, driverless vehicles, mobile technology, predictive analytics, network optimization software, and 3-D printing.

The presumption is that industry will want these solutions because of the coming added complexity and demands of the modern supply chain in the digital age.

But most supply chains still confront very basic problems and inefficiencies; they haven’t in many cases even fully deployed yesterday’s technology, so delivering product with drones doesn’t make the priority list.

So which technologies are key to the supply chain of the future? The same ones that were introduced 15 years ago that companies still haven’t adopted! This is unfortunate, because many of these technologies were designed to automate the supply chain office, and without automating the supply chain office, all of that promising talent you are committed to developing is typing away at tedium.

Just visit your customer service department, where very smart and capable humans – some with $120,000 college degrees — are reading data from pieces of paper and entering them into systems, an act which, according to supply chain technology gurus, should have disappeared years ago with the introduction of EDI, integrated systems, and OCR.

Supply chain managers are managing minutiae, not the supply chain.

Where does the minutiae come from? From the 18,000 to 30,000 phone calls or emails and the 120,000 to 350,000 manual interventions a typical ($2 billion +) company must make just to ensure proper system processing of its order-to-cash flow. And this is with all the normal ERP and associated technologies, such as EDI, that a company of that size normally uses.

Companies still have teams of people shuttling information and data all over the supply chain office, and because they are busy shuttling information they don’t have time to look at it to make sense of it and use it to improve your business.

Automating the supply chain office is one of the cheaper technology moves you could make. The EDI and OCR of the 1980s has gotten better and easier to deploy, and when strung together with complimenting technologies, can automate nearly all of your order processing, exceptions management, invoice discrepancies and customer claims work.

Automation also has the enormous benefit of – by definition – digitizing every piece of data from every transaction. If all of your shipping and invoice claims are scanned, stored, and sent to transactional systems for disposition, all that data is available to study for patterns, relationships, and other insights that can mean immediate savings. Like getting a view of the forest.

Want to evolve? Make the supply chain office run itself. For a $2 billion company selling to major retail outlets in the US, this means zero human intervention for every one of 60,000 deliveries a company of that size is likely to make. Most business rules are simple to automate: if X order received, send to Y location and reply Z back to customer.

A truly evolved supply chain office is one where all human assets are users of data, not movers of data, creators of opportunity based on a view of the forest, and customer relationship builders.

Image: Diagram of the control panel in the cockpit of Apollo 13’s Lunar Module Aquarius, which circled the moon in April 1970, by Steve Jurvetson. CC license.

Nearly all new applications you add to your enterprise will need some level of connectivity to your existing systems, as well as to systems outside your enterprise, and so integration is a key part of your implementation plan.

The problem is this: every software firm will tell you their application can be integrated to just about anything. Yes, anything is possible, with enough money and effort.

Here are some key areas you should be familiar with:

An Application Programming Interface (API) is a protocol used by software components to communicate with one another. It can be source code, or written specifications. A good question to ask the software vendor is whether it has developed APIs for interfacing with other programs, and which programs in particular.

You’ll still have work to do if the vendor has well-developed APIs, but at least you’ll know someone sat down, thought about, designed, built and tested some form of integration — all work you shouldn’t have to re-do. One area of the money pit avoided.

Electronic Data Interchange (EDI) is a standard for electronic messaging of commerce between two entities and frequently between two different systems. EDI was established in 1996 by the National Institute of Standards and Technology; it has widespread use around the world as a replacement for paper-based transactions between companies.

The application you’re considering or your company may use EDI as its standard method of interfacing other systems, especially outside your enterprise, and that is fine. But don’t assume that EDI means it’s as easy as plug and play, because while EDI is supposed to be a standard, it has been customized by enterprises for their own specific needs and has many formats, and in addition there are two standards for every EDI message — UN/EDIFACT, and ASCx12. It’s not unusual for companies to maintain 20 or 30 or more partner-specific EDI data maps.

EDI has limitations: It’s prone to failure if data is incorrect or not recognized by the recipient’s system, or if changes are made to its structure without thorough testing. EDI is also like sending data through a tube — no one sees the data except the sender and the recipient, so if you want to exchange data or transactions with another trading partner you have to build another tube.

Don’t underestimate the time and cost of integration via EDI. My experience with EDI is that it takes a team of people to maintain it; to monitor the pipes, to push through transactions that have stalled or encountered errors, and to develop new connections or changes to existing ones. If EDI is how you will integrate applications, just be aware of the costs and effort involved. [pullquote]EDI is not standard, not necessarily low cost, and certainly not 100% reliable.[/pullquote]

If EDI is the way your customers want to exchange with you, you will have to accommodate. To mitigate the negatives of EDI, you can contract with one of the business-to-business (B2B) commerce companies that have emerged in recent years. These firms – GXS/OpenText, SPS Commerce, IBM/Sterling Commerce – among others — will host your EDI integration, monitor your connections 24×7, react to and solve messaging failures, and map new connections to trading partners.

Image: r2hox; data.path Ryoji.Ikeda – 4

EDI has been for many years the work-horse for any sizable company that wants to efficiently conduct business with its trading partners (suppliers and customers).  But EDI has one annoying tendency: message failures; that is, a message (purchase order, invoice) that failed to reach its intended receiver.  No message, no PO, no invoice, no transaction, no sale, no cash.

EDI works a lot like the tasks that contestants have to perform on The Amazing Race: something has to be rendered in precisely the way prescribed, or contestants do not advance.  When the contestants fail, they do not know why, which is also generally the case with EDI failures – and an investigation of the failed message is required.

EDI messages have many segments that, arranged in a particular way, constitute the “map” for the message.  The segments are populated with data, such as customer number, product number, gross price, and net price.  Trading partners agree on a standard map for each type of transaction and therefore on the segments and the data structure within the map.  Any deviation from standard results in message failure.

These deviations stem from the every-day mundane workflow: a product number is changed on the sending or receiving end, data is entered incorrectly, new product master data isn’t uploaded into someone’s system, a suffix or prefix is added to a value in one of the segments, a trading partner changes part of the map and fails to communicate the change, or a required field is blank.  Adding to the complexity are increasing demands for more data on the EDI message itself, some of which, such as warranty information, is nearly impossible to integrate into an EDI map.

For the master data portion, data synchronization tools exist and are important in an EDI environment.  Methods to keep these records in sync range from emails to spreadsheet uploads to third party services.  It’s not exciting work, which is why it’s so easy to give it little attention.

There are at least three ways to align data between trading partners.  One is to employ electronic synchronization through standard EDI messages.  In this scenario, the systems used by your trading partners are immediately updated for changes in your master data.  Another is to use a third party data management service such as 1 World Sync, and another is to incorporate your data synchronization with your EDI services company.  SPS Commerce is one EDI services firm that has developed item data maintenance as part of its offerings, and it offers user portals to identify and display messaging errors and message tracking in human-readable formats.

I believe EDI is something that should be outsourced, and so for me incorporating data synchronization through an EDI services company is the best option.  The electronic and third-party data synchronization solutions also potentially leave out many data elements that are critical for uninterrupted EDI messaging, such as DUNs numbers, banking information, item cross-referencing, and special codes.

Having said that, nothing is foolproof.  Human mistakes can’t be avoided.  Until someone invents the next generation of e-commerce we are stuck with traditional EDI and its weaknesses; being aware of those weaknesses is the first step to overcoming them.

The social network is (one of) your sales channels.  Map of Facebook connections; by Michael Coghlan, CC license

“Omnichannel” commerce describes the (new) reality of being able (are you able?) to sell and deliver your goods and services to anyone, anywhere, at any time.  Not just sell, but carry the selling experience to the consumer in your own unique way.  Selling your goods through Amazon is not selling in a true B2C sense, because you don’t control the buying environment and buying experience; your stuff is on their site just like everyone else’s; all you have to do is ship the order.

And not just deliver, but completely fulfill your customer’s order in a virtual and physical sense, including returns, adjustments, credits, coupon discounts, and loyalty discounts, stuff that your current systems are probably unprepared to manage.

Consider an example:  You are a name brand manufacturer of sporting goods.  Before “omnichannel,” you sold through distributors to sporting goods retailers or directly to big box discount outlets or department stores. Your go-to-market path and the systems you needed were relatively simple.

Now, in an omnichannel world, your customers want to buy your products on Amazon, e-Bay or any number of sites, or directly from your web site delivered by Fedex, directly from you delivered to your local department store, or from inside the store but delivered to your home.  They want to use an online coupon in the store or a store coupon to buy online. They want to return everything at no cost and with no hassle.

The main point: your customers still want your goods, but the mechanics of selling to them and satisfying them have changed dramatically, requiring a whole new set of enterprise software tools.  Author and adviser Geoffrey Moore calls these tools systems of engagement, and clearly distinguishes them from the traditional systems of record most enterprises are used to.  In omnichannel, you need both, and engagement systems must work hand in hand with systems of record.

This is the value (some) e-commerce firms provide.  One of them is SPS Commerce, a small but successful company based in Minneapolis.  Other traditional EDI providers like GXS/OpenText, IBM Sterling, and SAP/Crossgate are also competing in this space, and the race to “own” omnichannel is on.

My advice:

• Your legacy ERP systems won’t get you there; you need commerce-capable systems of engagement;
• There is a lot of hype around omnichannel and therefore many vendors claiming they have the best solutions; look for years of experience in multi-channel fulfillment;
• Pick a small pilot project with narrow scope; get e-commerce vendors to let you try-and-buy;
• For a larger project such as outsourcing B2C, use a structured RFP process and compare vendors in an apples-to-apples way;
• Straight-on EDI services have become a commodity, so look for vendors that can give you other omnichannel capabilities such POS analytics and data integration, digital product and image catalogs, or configurable B2C sales platforms; or e-commerce vendors who already have a large percentage of your customers and suppliers already in their network.